North Texas-based Nationstar Mortgage Holdings has announced that it will merge with the former parent company of Washington Mutual, WMIH Corp., in a deal valued at $3.8 billion.
Nationstar, based in Coppell, combines mortgage servicing with a fully integrated loan originations platform, supported by its Xome business, which provides services spanning the real estate and mortgage markets. Under its Mr. Cooper brand, Nationstar is the largest non-bank servicer in the U.S.
WMIH’s shareholders include a number of institutional investors, the largest of which is KKR.
Upon completion, Nationstar shareholders will receive $1.2 billion in cash and WMIH shares valued at an estimated $702 million. In addition, approximately $1.9 billion of Nationstar’s existing senior unsecured notes will be refinanced at closing, for total deal consideration of $3.8 billion.
The operating business will retain the Nationstar Mortgage name and its Coppell headquarters and, at least initially, be traded on the NASDAQ under the ticker symbol “WMIH”. Nationstar’s operations will continue as normal and its employees will join the combined enterprise. Nationstar’s senior leadership team will lead the combined company, according to the news release.
Upon completing the transaction, the combined company’s board of directors will comprise 7 members, including 3 from WMIH and 4 from Nationstar.
“Nationstar aligns perfectly with our acquisition strategy and has a strong track record of providing mortgage servicing and loan and real estate offerings in various market conditions,” said Bill Gallagher, CEO of WMIH. “Nationstar’s talented and experienced management team, best-in-class servicing platform, and continued investments in customer education and self-service position it for growth across channels and services. We look forward to working with Nationstar’s talented team to build on the company’s strong foundation to drive growth, expand the platform and create shareholder value. The combined company is expected to benefit from WMIH’s platform and financial attributes, which are expected to enhance free cash flow available to support business growth and be accretive to shareholders’ equity.”
The transaction has been unanimously approved by the boards of directors of both companies and is subject to approval by the shareholders of both companies, as well as regulatory approvals and other customary closing conditions. An entity owned by investment funds managed by an affiliate of Fortress Investment Group LLC, holding approximately 68 percent of Nationstar’s voting shares, has contractually agreed to support the transaction and elect cash consideration for approximately 34 million shares, subject to proration. KKR, which owns 24 percent of WMIH’s voting shares, has also agreed to support the transaction.
The transaction is anticipated to close in the second half of 2018.
